Economists warn possible relocation abroad

FKI symposium on economic exodus: possibility and measures

A symposium on economic exodus was held by FKI on June 26 to look at the possibility of relocating production facilities abroad by Korean industriesk, or the so-called 'Economic Exodus,' and measures.

In his opening remarks, Chan Ho Park, FKI Secretary General, asserted, "Our businesses are now facing adverse management environment today in terms of institution, factor cost, and a social atmosphere." "From an institutional perspective, discussions on raising taxes which are running counter to a global trend to lower them, and excessive corporate regulations are affecting business activities. In factor cost, businesses have trouble with factor cost which is higher than productivity, and various legislative moves such as mandatory extension of the retirement age to 60. On top of these, they are facing anti-market sentiments which are prevalent in our society," he expounded.

Prof. Ho Hwan Park of Ajou University spoke on "Factor analysis of relocating abroad by domestic businesses based on comparison of business management conditions of Korea and Vietnam." Should the institutional burdens on businesses remain unchecked, the panelists warned, more and more companies might consider relocating their production facilities abroad, which would eventually trigger a sharp drop in industrial production at home and national income. Relocation of manufacturing bases to foreign locations, in particular, could end up with 'hollowing out' of technology which would entail serious erosion of our economic growth potential, they cautioned.

To stave off such exodus, the government and politicians need to work to ensure freer conditions for business management in a firm belief in a free market economy. While agreeing that rigid rules must be applied to unfair trade activities, the experts pointed out excessive proactive regulatory measures should never curb corporate activities. They also shared a view that we all need to create a social milieu wherein job-making businesses and entrepreneurs are respected.